NEW YORK--(BUSINESS WIRE)--Forest Laboratories, Inc. (NYSE: FRX), an international pharmaceutical
manufacturer and marketer, today reported a GAAP loss per share of $0.58
in the third quarter of fiscal 2013 compared with income of $1.04 in the
third quarter of fiscal 2012. Included in the third quarter results were
upfront/licensing agreement payments totaling $76.0 million, or $0.29
per share, net of tax. The non-GAAP loss per share was $0.21 in the
third fiscal quarter of 2013 compared with income of $1.08 in the third
quarter of fiscal 2012.

Net sales for the quarter decreased 41.6% to $678.0 million, from $1.2
billion in the year-ago period. Namenda® (memantine HCl), an NMDA
receptor antagonist for the treatment of moderate and severe Alzheimer’s
disease, recorded sales of $345.8 million during the quarter, an
increase of 1.6% from last year’s fiscal third quarter. Namenda sales
were negatively impacted by higher contract rebates, largely driven by
the Medicare Part D Coverage Gap liability, which peak in the fiscal
third quarter and are expected to return to normal levels in the fiscal
fourth quarter.

Sales of Bystolic® (nebivolol), a beta-blocker for the treatment of
hypertension, were $108.8 million, an increase of 20.1% over the
year-ago period. Sales of Savella® (milnacipran HCl), a selective
serotonin norepinephrine dual reuptake inhibitor (SNRI) for the
management of fibromyalgia, were $25.6 million, a decrease of 2.7% from
last year’s third quarter.

In August 2011 the Company launched Daliresp® and Viibryd®. Daliresp
(roflumilast), a PDE4 enzyme inhibitor for the treatment to reduce the
risk of exacerbations in patients with chronic obstructive pulmonary
disease (COPD), recorded sales of $17.5 million. Sales of Daliresp in
last year’s fiscal third quarter were $8.4 million. Daliresp sales were
similarly impacted by contract rebates as described above. Viibryd
(vilazodone HCl), an SSRI and a partial agonist at serotonergic 5-HT1A
receptors for the treatment of major depressive disorder (MDD) recorded
sales of $40.6 million. Sales of Viibryd in last year’s fiscal third
quarter were $18.9 million. Teflaro® (ceftaroline fosamil), a
broad-spectrum bactericidal cephalosporin antibiotic for the treatment
of adults with community-acquired bacterial pneumonia and with acute
bacterial skin and skin structure infections, recorded sales of $11.5
million. Teflaro was launched in March 2011 and recorded sales of $6.5
million in last year’s third fiscal quarter.

The Company commercially launched two of its newest products, Tudorza®andLinzess® in December 2012. Tudorza (aclidinium bromide
inhalation powder), an anticholinergic indicated for the long-term
maintenance treatment of bronchospasm associated with COPD recorded
initial trade stocking of $12.2 million. Linzess(linaclotide), a
guanylate cyclase (GC-C) agonist for the treatment of both irritable
bowel syndrome with constipation (IBS-C) and chronic idiopathic
constipation (CIC) in adults recorded initial trade stocking of $19.2
million.

Sales of Lexapro® (escitalopram oxalate), a selective serotonin reuptake
inhibitor (SSRI) for the initial and maintenance treatment of MDD in
adults and adolescents and generalized anxiety disorder in adults were
$20.3 million compared with $593.0 million in the year-ago period. The
Lexapro patent expired on March 14, 2012.

Contract revenue was $38.3 million in the current quarter compared to
$34.1 million last year. Benicar® (olmesartan medoxomil) co-promotion
income increased to $36.0 million, compared to $31.4 million in last
year’s third quarter.

Cost of sales as a percentage of sales was 22.6% in both the current and
prior year third quarters. Selling, general and administrative expense
for the current quarter was $428.4 million as compared to $396.1 million
in the year-ago quarter. The current level of spending reflects the
resources and activities required to support our currently marketed
products, particularly our newest products: Teflaro, Daliresp, Viibryd,
Tudorza and Linzess.

Research and development (R&D) spending for the current quarter was
$325.3 million compared with $191.3 million in last year’s third
quarter. The current quarter includes upfront licensing/agreement
payments of $76.0 million and milestone payments of $44.5 million
compared to $24.6 million of milestone payments in the prior year’s
quarter.

Income tax benefit for the quarter was $30.7 million, reflecting a
quarterly effective tax rate of -16.6%. For the quarter ended December
31, 2012 a net loss of $153.6 million or loss of $0.58 per share was
reported compared to net income of $278.4 million or income of $1.04 per
share reported for last year’s third quarter.

Nine Month Results

Revenues for the nine months ended December 31, 2012 decreased 34.7% to
$2.3 billion from $3.5 billion in the prior year.

Net income for the nine months ended December 31, 2012, the Company
reported decreased to a net loss of $77.5 million compared to net income
of $786.4 million reported in the nine months of the prior year.
Reported earnings per share decreased to a loss of $0.29 per share in
the current year’s nine months as compared to earnings per share of
$2.85 in last year’s nine months.

Fiscal 2013 Guidance

The Company now expects that non-GAAP earnings per share for the fiscal
year ending March 31, 2013 will be at the lower end of the previously
guided range of $0.45 to $0.60. Total net revenue (includes product
sales as well as the earnings contribution from Benicar, authorized
generic sales of Lexapro, interest income and other income) is now
expected to be between $3.1 billion and $3.2 billion.

Howard, Solomon, Chairman and Chief Executive Officer of Forest said:
“In the third quarter of fiscal 2013, as expected, we incurred a loss
resulting principally from sales lost following the expiration of
Lexapro’s patent exclusivity in March 2012. The third quarter had lower
sales of branded and generic Lexapro than the prior two quarters, as
Lexapro declined in sales closer to its ultimately anticipated levels.

“More importantly, in the month of December 2012, we launched two major
new products, Tudorza and Linzess. We believe sales of those products,
and the seven products already launched and two products,
levomilnacipran and cariprazine, which were filed with the FDA this
year, and which we anticipate will be launched in our next fiscal year,
will ultimately equal and exceed the sales lost following the expiration
of Lexapro’s exclusivity and the potential loss in subsequent years of
Namenda’s exclusivity. And, of course, there is always the potential for
additional new products.

“Our strategy for acquiring products has repeatedly been confirmed, in
concept and in execution. Of course, the sales potential of each varies.
A few, like Savella and Teflaro, will achieve more modest sales. But,
for example, Bystolic, launched several years ago, with sales of $108
million this last quarter, an increase of 20.1% over the previous year,
with its growth to be significantly augmented by the combination with
valsartan, presently in Phase III, is likely to be another one of our
largest products in coming years.

“The launch of every product requires major effort. It is costly
financially and in human effort, and two in one quarter is especially
demanding. Each involves sales force training and each involves a costly
launch meeting with additional training and motivational presentations
involving nearly two thousand sales and marketing personnel at each
meeting. Most of those expenses were incurred in the last quarter for
both products, including increased production costs for launch
quantities, which were not compensated by initial stocking sales. Our
marketing department and sales force membership and management exceeded
even their usual impressive performance. It always takes a little while
for the expense dust to clear, and to see the sales and profits
generated by each new product.

“During the quarter we and our partner Gedeon Richter were pleased to
announce that we have submitted the NDA to the FDA for cariprazine, a
potent D3/D2 receptor partial agonist with preferred binding to D3
receptors, for the treatment of schizophrenia and Bipolar I Disorder.
Schizophrenia and Bipolar I Disorder are serious medical conditions
requiring treatment that affects millions of adult patients in the U.S.
We are also studying cariprazine for the treatment of bipolar
depression, and for treatment resistant depression. In addition, earlier
this year we announced submission of our NDA for levomilnacipran for the
treatment of major depressive disorder.

“In addition, we announced two important business development
transactions during the quarter. In October we were pleased to announce
that we entered into a broad strategic alliance with Moksha8 in Latin
America. Moksha8 is a leader in the commercialization of CNS medicines
in Latin America. Our alliance includes an exclusive license from Forest
to Moksha8 to commercialize Viibryd, and potentially other Forest
products and also provides us with an opportunity to acquire Moksha8 in
two years under certain conditions. In November we were pleased to
announce that we entered into an agreement with Adamas Pharmaceuticals
for the development and commercialization of a fixed dose combination of
Namenda XR and donepezil as a once-daily therapy for the treatment of
moderate and severe dementia of the Alzheimer’s type.

“The portfolio of our nine new products will cover six major therapeutic
areas – anti-infective, cardiovascular, central nervous system,
gastrointestinal, respiratory and pain. Several of these products are
already being developed in logical combination with other drugs, i.e.
Bystolic and valsartan, Namenda XR and donepezil, Tudorza and
formoterol, and Teflaro with avibactam. And there will be more to come
as we continue to execute our business development strategy to find new
product opportunities.

“We believe that we are well on our way to realizing the fruits of
success from our new product portfolio that could ultimately generate
significant levels of sales and earnings to more than replace the
expiring products and secure long-term growth for our Company.”

Use of Non-GAAP Financial Information

Non-GAAP earnings per share information adjusted to exclude certain
costs, expenses and other specified items are summarized in the table
below. This information is intended to enhance an investor’s overall
understanding of the Company’s past financial performance and prospects
for the future. This information is not intended to be considered in
isolation or as a substitute for earnings per share prepared in
accordance with GAAP.

FOREST LABORATORIES, INC. AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL INFORMATION

THREE MONTHS

NINE MONTHS

ENDED

ENDED

DECEMBER 31,

DECEMBER 31,

2012

2011

2012

2011

Reported Diluted earnings/(loss) per share:

$

(0.58

)

$

1.04

$

(0.29

)

$

2.85

Per share impact of specified items net of tax:

Amortization arising from business combinations and acquisitions of
product rights

Recorded in Cost of sales

0.04

0.02

0.10

0.05

Recorded in Selling, general and administrative

0.04

0.02

0.12

0.06

Upfront licensing/agreement payments

0.28

--

0.28

0.14

Rounding

0.01

--

0.01

--

Adjusted Non-GAAP earnings/(loss) per share:

$

(0.21

)

$

1.08

$

0.22

$

3.10

Forest will host a conference call at 10:00 AM EST today to discuss the
results. The conference call will be webcast live beginning at 10:00 AM
EST on the Company’s website at www.frx.com
and also on the website www.streetevents.com.
Please log on to either website at least fifteen minutes prior to the
conference call as it may be necessary to download software to access
the call. A replay of the conference call will be available until
February 14, 2013 at both websites and also by dialing (855) 859-2056
(US or Canada) or +1 (404) 537-3406 (international), Conference ID:
78714269.

About Forest Laboratories and Its Products

Forest Laboratories’ (NYSE: FRX) longstanding global partnerships and
track record developing and marketing pharmaceutical products in the
United States have yielded its well-established central nervous system
and cardiovascular franchises and innovations in anti-infective,
respiratory gastrointestinal, and pain management medicine. The
Company’s pipeline, the most robust in its history, includes product
candidates in all stages of development across a wide range of
therapeutic areas. The Company is headquartered in New York, NY. To
learn more, visit www.FRX.com.

Except for the historical information contained herein, this release
contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve a
number of risks and uncertainties, including the difficulty of
predicting FDA approvals, the acceptance and demand for new
pharmaceutical products, the impact of competitive products and pricing,
the timely development and launch of new products, and the risk factors
listed from time to time in Forest Laboratories’ Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and any subsequent SEC filings.
Forest assumes no obligation to update forward-looking statements
contained in this release to reflect new information or future events or
developments.